An Empirical Examination of Compensation of REIT Managers

Principal-agent literature finds that manager and owner incentives can be aligned with performance contingent contracts. We investigate the compensation of Real Estate Investment Trust (REIT) industry executives. The competitive nature of mortgage and equity markets, in conjunction with the corporate tax exemption available when REITs distribute most of their earnings as dividends, is likely to influence the compensation of REIT managers. Executive compensation is modeled as a function of revenues and unexpected profit. After transforming the model to reduce collinearity and heteroskedasticity, we find compensation to be generally positively related to revenue. We also find unexpected profit to be generally insignificantly related to compensation, but positively related in those cases where it is significant.

Mortgage Lenders' Market Response to a Landmark Regulatory Decision Based on Fair Lending Compliance

Regulation of real estate lending has substantially increased in the past decade. Government efforts to improve compliance with Community Reinvestment Act mandates are evidence of increased emphasis on racial equal opportunity in loan origination. To investigate the impact of these efforts, this paper examines the Federal Reserve Bank rejection of Shawmut National Corporation's application to buy New Dartmouth Bank. Rejection was based on Shawmut's poor compliance with fair-lending guidelines. Testing finds significant negative abnormal stock returns for samples of mortgage lenders on the announcement day of Shawmut's application rejection. In addition, cross-sectional analysis reveals an inverse relationship between national banks' cumulative abnormal returns (CARs) and a measure of fair lending.

The Impact of the California Earthquake on Real Estate Firms' Stock Value

The purpose of this study is to examine the effect of the October 17, 1989 California earthquake on the stock value of firms involved in the real estate industry. The impact of the earthquake on real estate-related stock prices is examined. The findings indicate that the earthquake conveyed important new information to the market that was reflected in statistically significant negative stock returns among those firms operating in the San Francisco area. Real estate-related firms operating in other areas of California were generally unaffected by the earthquake.

A Learning Game For Youth Financial Literacy Education In The Teen Grid Of Second Life Three-Dimensional Virtual Environment

Game-like three-dimensional (3D) virtual worlds have become popular venues for youth to explore and interact with friends. To bring vital financial literacy education to them in places they frequent, a multi-disciplinary team of computer scientists, educators, and financial experts developed a youth-oriented financial literacy education game in the Teen Grid of Second Life 3D online virtual world. This paper presents the design and development process of this financial literacy education game, its learning effectiveness in classrooms, and lessons learned from the process

The Effect Of Solicitation And Independence On Corporate Bond Ratings

This comparison of solicited and independent bond rating agencies performance reveals that the ratings assigned by Moody\u27s and Standard & Poor\u27s are consistently lower than those assigned by Duff and Phelps and Fitch IBCA and are consistently higher than those assigned by MCM. While Moody\u27s and S&P generally downgrade bond ratings sooner than Duff and Phelps and Fitch IBCA, the four major agencies upgrade at the same time. Moody\u27s tends to have a higher upgrade magnitude than Duff and Phelps, but the downgrade magnitudes do not differ. MCM upgrades its ratings more quickly than either Moody\u27s or S&P. The results give support to the timeliness and accuracy of ratings provided by the independent agencies. © Blackwell Publishing Ltd. 2004

Dividend Decapitalization And Financial Performance Signals

This study examines the stock price response to dividend announcements which include a return of capital to owners.  The continuation of an amount previously distributed exclusively from earnings is effectively a dividend reduction.  Dividend cuts have been shown to provide an unfavorable signal to investors.  Empirical results indicate that the market does not infer unfavorable subsequent financial performance signals from “decapitalization” dividends

Rental Software Valuation In It Investment Decisions

The growth of application service providers (ASPs) is very rapid, leading to a number of options to organizations interested in developing new information technology services. The advantages of an ASP include spreading out payments over a contract period and flexibility in terms of responding to changes in technology. Likewise, newer risks are associated with ASPs, including pricing variability. Some of the more common capital budgeting models may not be appropriate in this volatile marketplace. However, option models allow for many of the quirks to be considered. Modification of the option pricing model and an analytical solution method incorporated into a spreadsheet for decision support are described and illustrated. The analytical tool allows for better decisions compared to traditional value analysis methods which do not fully account for the entry and exit options of the market. © 2003 Elsevier B.V. All rights reserved